Page 1 of 136
Accredited Investment Fiduciary (AIF) Exam
Questions and Correct Answers with
EXPLANATIONS LATEST THIS YEAR
Summarized Exam Coverage
The AIF® exam is administered by Fi360 and tests mastery of the fiduciary standard of care within a 4-
step prudent investment process known as the Fiduciary Quality Management System™. The exam
consists of 80 multiple-choice questions (70 scored, 10 unscored) with a 120-minute time limit,
requiring a 70% passing score. The content is divided into four domains based on the Prudent Practices:
1. Organize (17–21 items): Fiduciary roles, responsibilities, conflicts of interest, governing
documents, written agreements, and cybersecurity.
2. Formalize (15–19 items): Investment Policy Statement (IPS) creation, risk/return objectives,
time horizons, asset allocation strategy, and ESG integration.
3. Implement (13–17 items): Due diligence for service providers and investments, application of
regulatory safe harbors, and documenting all decisions.
4. Monitor (17–21 items): Performance benchmarking, manager reviews, fee reasonableness,
proxy voting policies, and ongoing organizational effectiveness.
The curriculum is grounded in the Global Fiduciary Precepts and key legislation
including ERISA (corporate plans), UPIA (private trusts), UPMIFA (non-profits/endowments), and
the Investment Advisers Act of 1940. Certification requires training completion (online, virtual, or
blended) followed by the closed-book proctored exam.
1. An investment committee chair is reviewing their legal obligations. Which statement best describes
the duty of loyalty?
A) To maximize returns regardless of risk
B) To act solely in the interest of the client or plan participants
C) To follow the instructions of the plan sponsor without question
D) To minimize investment expenses at the expense of diversification
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Answer: B
The duty of loyalty requires fiduciaries to act exclusively in the best interest of clients or beneficiaries,
subordinating all other interests to this primary obligation.
2. What is the primary purpose of an Investment Policy Statement (IPS)?
A) To guarantee a specific rate of return
B) To document the process for investment decisions, including risk tolerance and objectives
C) To list the names of all investment committee members
D) To serve as a legally binding contract with the custodian
Answer: B
The IPS is a strategic roadmap that outlines the framework for all investment decisions, including goals,
constraints, and performance expectations, ensuring consistency.
3. Which step of the Fiduciary Quality Management System™ involves appointing an investment
committee?
A) Implement
B) Formalize
C) Organize
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D) Monitor
Answer: C
The "Organize" step involves structuring the fiduciary process, including defining roles, appointing
committees, drafting governing documents, and gathering data.
4. A plan fiduciary is considering delegating investment decisions to a professional manager. Under
ERISA 405(c)(2), what is required to limit liability?
A) A verbal agreement with the manager
B) An explicit written contract acknowledging fiduciary status
C) An annual review of the manager's personal finances
D) A fidelity bond covering all potential losses
Answer: B
The 405(c) safe harbor requires a written agreement by which the named fiduciary acknowledges
delegation of investment discretion to a manager who acknowledges fiduciary status.
5. True or False? Fiduciary liability is determined solely by the investment performance of the portfolio.
A) True
B) False
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Answer: B
Fiduciary liability is determined by whether a prudent process was followed, not by the actual investment
outcomes or market returns.
6. Under the Uniform Prudent Investor Act (UPIA), what is the primary standard for portfolio
management?
A) Maximizing short-term gains
B) Avoiding all market risk
C) Risk and return should be viewed based on the portfolio as a whole
D) Investing only in government securities
Answer: C
UPIA requires that investments be evaluated in the context of the entire portfolio, not in isolation,
balancing risk and return prudently.
7. A retirement plan committee is reviewing fees. Which concept requires that fees must be reasonable
for the services provided?
A) The prudent expert rule
B) The 404(c) safe harbor
Accredited Investment Fiduciary (AIF) Exam
Questions and Correct Answers with
EXPLANATIONS LATEST THIS YEAR
Summarized Exam Coverage
The AIF® exam is administered by Fi360 and tests mastery of the fiduciary standard of care within a 4-
step prudent investment process known as the Fiduciary Quality Management System™. The exam
consists of 80 multiple-choice questions (70 scored, 10 unscored) with a 120-minute time limit,
requiring a 70% passing score. The content is divided into four domains based on the Prudent Practices:
1. Organize (17–21 items): Fiduciary roles, responsibilities, conflicts of interest, governing
documents, written agreements, and cybersecurity.
2. Formalize (15–19 items): Investment Policy Statement (IPS) creation, risk/return objectives,
time horizons, asset allocation strategy, and ESG integration.
3. Implement (13–17 items): Due diligence for service providers and investments, application of
regulatory safe harbors, and documenting all decisions.
4. Monitor (17–21 items): Performance benchmarking, manager reviews, fee reasonableness,
proxy voting policies, and ongoing organizational effectiveness.
The curriculum is grounded in the Global Fiduciary Precepts and key legislation
including ERISA (corporate plans), UPIA (private trusts), UPMIFA (non-profits/endowments), and
the Investment Advisers Act of 1940. Certification requires training completion (online, virtual, or
blended) followed by the closed-book proctored exam.
1. An investment committee chair is reviewing their legal obligations. Which statement best describes
the duty of loyalty?
A) To maximize returns regardless of risk
B) To act solely in the interest of the client or plan participants
C) To follow the instructions of the plan sponsor without question
D) To minimize investment expenses at the expense of diversification
, Page 2 of 136
Answer: B
The duty of loyalty requires fiduciaries to act exclusively in the best interest of clients or beneficiaries,
subordinating all other interests to this primary obligation.
2. What is the primary purpose of an Investment Policy Statement (IPS)?
A) To guarantee a specific rate of return
B) To document the process for investment decisions, including risk tolerance and objectives
C) To list the names of all investment committee members
D) To serve as a legally binding contract with the custodian
Answer: B
The IPS is a strategic roadmap that outlines the framework for all investment decisions, including goals,
constraints, and performance expectations, ensuring consistency.
3. Which step of the Fiduciary Quality Management System™ involves appointing an investment
committee?
A) Implement
B) Formalize
C) Organize
, Page 3 of 136
D) Monitor
Answer: C
The "Organize" step involves structuring the fiduciary process, including defining roles, appointing
committees, drafting governing documents, and gathering data.
4. A plan fiduciary is considering delegating investment decisions to a professional manager. Under
ERISA 405(c)(2), what is required to limit liability?
A) A verbal agreement with the manager
B) An explicit written contract acknowledging fiduciary status
C) An annual review of the manager's personal finances
D) A fidelity bond covering all potential losses
Answer: B
The 405(c) safe harbor requires a written agreement by which the named fiduciary acknowledges
delegation of investment discretion to a manager who acknowledges fiduciary status.
5. True or False? Fiduciary liability is determined solely by the investment performance of the portfolio.
A) True
B) False
, Page 4 of 136
Answer: B
Fiduciary liability is determined by whether a prudent process was followed, not by the actual investment
outcomes or market returns.
6. Under the Uniform Prudent Investor Act (UPIA), what is the primary standard for portfolio
management?
A) Maximizing short-term gains
B) Avoiding all market risk
C) Risk and return should be viewed based on the portfolio as a whole
D) Investing only in government securities
Answer: C
UPIA requires that investments be evaluated in the context of the entire portfolio, not in isolation,
balancing risk and return prudently.
7. A retirement plan committee is reviewing fees. Which concept requires that fees must be reasonable
for the services provided?
A) The prudent expert rule
B) The 404(c) safe harbor
